Economic Security – Global Politicshttp://global-politics.co.uk/wp
An International Affairs MagazineSat, 05 Aug 2017 07:38:12 +0000en-UShourly1The Economics of Catalan Secession From Spainhttp://global-politics.co.uk/wp/2017/08/04/economics-catalan-secession-spain/
http://global-politics.co.uk/wp/2017/08/04/economics-catalan-secession-spain/#respondFri, 04 Aug 2017 18:04:38 +0000http://global-politics.co.uk/wp/?p=3196Image by David Tubau (Energético) One year on from the Brexit vote, Europe’s economy faces yet another monumental challenge in the shape of the Catalan independence referendum. There are doubts as to whether the referendum will go ahead; a referendum on independence was held in 2014, but after the Spanish constitutional court annulled it, the […]

One year on from the Brexit vote, Europe’s economy faces yet another monumental challenge in the shape of the Catalan independence referendum. There are doubts as to whether the referendum will go ahead; a referendum on independence was held in 2014, but after the Spanish constitutional court annulled it, the referendum went ahead as a non-binding plebiscite. The Spanish government has pledged again to do all it can to block the vote.

In the event of a Catalan secession there would undoubtedly be much to worry about economically for both Catalonia and Spain, as well as for the member states of the European Union. Catalonia is the main driving force of the Spanish economy and accounts for around 20% of Spanish GDP. Such a loss in production would represent an insurmountable challenge for the Spanish economy to face. Hence the national government’s resolute opposition to a binding referendum on the issue. Furthermore, Catalonia accounts for 25% of total exports from Spain while the capital of Madrid only makes up 11% of that total. These figures stand as firm evidence of the economic muscle that Catalonia has in its hands, and as a stark reminder to the Spanish government of what they may lose if a secession were to proceed.

The main economic argument used by pro-independence advocates is that Catalonia is fiscally mistreated by the Spanish government. Year on year, Catalonia suffers from a fiscal deficit – the Spanish government redistributes Catalan tax revenues to all the autonomous regions of Spain, in a system whereby Catalonia receives less in funding from the government than what it contributes in tax payments. Moreover, the level of public funding per capita in Catalonia is lower than in many of the other autonomous regions, despite the fact that Catalonia is the biggest fiscal net-contributor of all the regions.

A crucial element of secession talks would concern the Catalan portion of national debt. The Catalan debt to GDP ratio currently sits at 35.4%; however, it is often argued by those in favour of independence that such levels of debt have accumulated due to the lack of funding Catalonia receives from the national government each year. In 2016, Catalonia received 10.7% of the allocation of territorial funding by the Spanish government, a relatively low figure considering the population makes up 16% of the entirety of the country’s populace, and that Catalonia contributes towards 20% of Spanish GDP. Therefore, it is logical to see how debt may accrue in the case of under-funding, leaving the Catalan government with no option but to borrow in order to fund public services. An independent Catalonia with complete fiscal autonomy would be able to use the totality of its tax revenue to reinvest in its economy and society.

Probably the most vital component of Catalan independence negotiations would come with the discussions of its currency. In the event that Catalonia secedes from Spain, it would be imperative for the region to remain in the euro zone. An expulsion from the euro area would leave the Catalan government with a multitude of obstacles to face. These problems would be linked to the prohibitive access Catalonia would have to the European Central Bank. It is possible that the region could keep the euro as its de facto currency. However, its inability to receive financing from the ECB would likely lead to an increase in debt, consequently placing significant strain on the economy.

The intention of remaining in the euro zone will go hand in hand with Catalonia’s plan to maintain its position as a member of the European Union. Anti-independence proponents argue that Catalonia’s transition back into the EU would be an arduous effort, as it could take several years to negotiate and ratify, which would be detrimental to the Catalan economy. Joining the EU requires ratification from all existing member states, and just one veto would see its membership attempt rejected. Worryingly for Catalonia, Spain could be the EU member state to use its veto against the region which left it. Other countries such as Turkey and Macedonia have been in contention for accession to the European Union for several years to no avail.

Notwithstanding the opposition to Catalan independence from the EU and Spain, it would still make rational economic sense for all parties involved to maintain a customs union. Catalonia is an important infrastructural region for trade – it is the biggest Mediterranean port in terms of goods volume. In 2016, exports for Catalonia grew by 2%, a figure considerably greater than that of the Euro area (0.7%), Spain (1.7%), and Germany (1.2%). France and Germany are two of the main destinations for Catalan exports, along with other regions in Spain. This could continue post-secession, but would depend entirely upon the nature of negotiations. In the event of independence, Catalonia would have the opportunity to become a more prominent force in the international realm, allowing it to forge closer relations with other states such as France, Italy, and Germany. Again, this would rely upon the nature of secession, specifically with regard to the Catalan position in the EU.

The most pertinent question many will ask in the economic context of Catalan independence is this: Would an independent Catalonia be economically viable? The simple answer to this question is yes. Catalonia’s GDP in 2016 was 223 billion euros. To put this in perspective, the total GDP of Portugal in the same year was significantly less at around 180 billion euros. Moreover, GDP per capita in Catalonia was around 29 thousand euros in 2015, more than that of Italy, which was approximately 26 thousand euros. Thus, the Catalan economy certainly seems capable of being able to sustain an independent Catalan state.

Despite the impressive economic power of the Catalan region, the most critical question surrounding the debate does not concern the economic feasibility of Catalan independence, but rather the nature of the secession process. If Catalonia can maintain peaceful and progressive negotiations with both Spain and the EU, while securing the advantageous position of gaining quick access to the single market and the euro zone, then there is no reason to assume that the Catalan economy could not hold its own as an independent state. However, the people of Catalonia should be very aware of the detrimental economic consequences of an acrimonious secession.

]]>http://global-politics.co.uk/wp/2017/08/04/economics-catalan-secession-spain/feed/0Assessing the Impact of Independence On Scottish Agriculturehttp://global-politics.co.uk/wp/2017/05/08/impact-independence-scottish-agriculture/
http://global-politics.co.uk/wp/2017/05/08/impact-independence-scottish-agriculture/#respondMon, 08 May 2017 15:38:52 +0000http://global-politics.co.uk/wp/?p=2914The UK’s vote last year to leave the EU has resulted in Scotland once again re-evaluating whether or not independence would be in its best interests. The Brexit decision and the subsequent triggering of Article 50 have both generated significant political upheaval throughout the UK. In a recent speech, Nicola Sturgeon has added to that turmoil […]

]]>The UK’s vote last year to leave the EU has resulted in Scotland once again re-evaluating whether or not independence would be in its best interests. The Brexit decision and the subsequent triggering of Article 50 have both generated significant political upheaval throughout the UK. In a recent speech, Nicola Sturgeon has added to that turmoil by suggesting that now that the UK is leaving the EU Scotland should have a second referendum on independence in either 2018 or 2019. Scotland’s First Minister has been extremely vocal in her opinion that the question of independence deserves to be raised again, despite previously claiming that the first independence referendum was a ‘once in a lifetime’ event.

Since then, the SNP has seized on the opportunity presented by Brexit to press hard for another chance at gaining independence for Scotland, and the debate is already in full swing once again, with all sorts of projections and claims from both sides making it difficult to form an opinion on the merits of either independence or remaining a part of the UK.

One sector that could well see significant disruption if Scotland were to gain independence is agriculture, the success of which is bound up with Scotland’s ties with the rest of the UK.

With more than 290,000 people working in farming and more than 70% of the UK’s land under agricultural use, farming has a huge impact, directly and indirectly, on all of us. With many farmers and related businesses operating on both sides of the Scottish border there would inevitably be significant repercussions for many companies if Scotland gained full independence.

It seems that huge change is now inevitable for Scotland as it faces a new relationship with the EU. Should Indyref2 come off and bring about a different result than in 2014 then a new relationship beckons with the rest of the UK as well.

Much has been made in the media in recent weeks of the distinction between a ‘soft Brexit’ and a ‘hard Brexit’, and that distinction could make a huge difference to Scotland. Under a soft Brexit deal the UK would retain access to the single market, whereas under a hard Brexit single market access would be restricted and trade between the UK and the EU would be subject to tariffs and import/export restrictions.

For Scotland, a soft Brexit would mean that as part of the UK it could continue to trade through the EU Single Market. If Scotland gained independence and stayed in the EU a soft Brexit would still be desirable, as it would mean that it could retain its trading relationship with the rest of the UK. A hard Brexit, on the other hand, would be difficult for Scotland whether or not a second referendum means that it gains independence. Whilst most MSPs would undoubtedly like to see a soft Brexit that gave access to the Single Market, it is fair to say that there are rumblings of discontent down in Westminster about this option, largely because of the concessions that will likely need to be made to secure Single Market access. Those concessions are likely to be on the free movement of people.

Trade is not the only thorny issue when it comes to Scotland’s future after Brexit. It is thought that around 181,000 EU citizens are currently living in Scotland, with many of them working in unskilled jobs, particularly in the agricultural sector.

Since immigration played such a big part in the Brexit referendum it seems unlikely that the UK government will concede defeat on the issue of immigration controls during Brexit negotiations, leaving a question mark over the heads of those EU nationals who are already living and working in the UK. If free movement is restricted in some way it could result in the agricultural sector finding it increasingly difficult to fill vacancies. An independent Scotland, on the other hand, could make it harder for Scots to work in the rest of the UK and for non-Scottish citizens to cross the border to work.

Regional funding is another major concern for Scotland as the Brexit talks get under way. Under the Barnett Formula each part of the UK is allocated its share of public funding according to certain rules, ones which have historically and controversially favoured Scotland. With Scotland currently receiving the largest per capita public spending amount of any of the four UK member nations, leaving the UK could have a dramatic impact on the Scottish economy and public finances. With oil prices currently fairly low, many are questioning whether Scotland’s North Sea oil wealth would be enough to bridge the funding gap.

Funding is also a factor for Scotland when it comes to the EU as it receives a great deal in subsidies, particularly in the agricultural sector. With 85% of Scotland’s land designated as ‘Less Favoured Areas’, the country receives significant financial support for farming this land. If Scotland remains in the UK these subsidies are likely to disappear after Brexit. Whilst the UK government may choose to use money previously spent on EU contributions to bring in farming subsidies of its own this is by no means a certainty. The removal of EU farming subsidies could see a tenth of all UK farms fall into the red so the issue is clearly a very important one.

Even the question of currency is up for discussion should Scotland gain independence and stay a member of the EU. Back in 2013 the SNP stated that it would continue to use sterling if Scotland gained independence in 2014. Things look very different now though. If Scotland were to leave the UK and join the EU it is likely that adoption of the Euro would be a prerequisite imposed by Brussels.

The drop in sterling’s value has already improved the fortunes of many UK businesses which export their goods, and Scottish farmers enjoyed a boost of £96 million in 2016 due to sterling’s decline. Should Scotland leave the UK and adopt the euro, however, things might not look so rosy as Scottish exports to the UK may well then seem rather expensive.

Currency risk may also come into play if Scotland left the UK and became a member of the EU. In the agriculture sector, trading decisions are often made at the start of the season but those decisions do not turn into cold hard cash until harvest time many months later. If exchange rates move dramatically in the interim farmers could be looking at heavy losses unless costly risk hedging strategies are put in place.

Of course, much of the debate is pure speculation as there is no guarantee that a newly independent Scotland would even be allowed to join the EU or have access to the single market. For Scotland to be allowed to join the EU every other member state must give its approval. Here, Spain at the very least has indicated its unease, due in large part to fears that Catalonia will seek to follow Scotland’s lead and try for independence itself.

One rather bizarre outcome then might be that Scotland could find itself leaving both the UK and the EU. Piecing together a trade deal with either could be complex, with potentially damaging consequences for Scottish cross-border trade with a bad deal.

There is no crystal ball to help us predict how Brexit will pan out. There has never been a divorce quite like this one and it could be a triumph for the UK or an unmitigated disaster. Whilst it will undoubtedly be a bumpy ride for the UK, Scotland looks set for a much more complicated journey as it tackles, once again, the issue of independence alongside Brexit. Whatever decision the Scottish people take the implications are far-reaching, especially for the agriculture sector, which relies so heavily on EU subsidies and a mobile EU labour market. The constant debate about Brexit and the merits of Scottish independence are undoubtedly having a destabilising effect, but it is to be hoped that as negotiations start to get under way in earnest Scotland’s choices will become a little clearer.

]]>http://global-politics.co.uk/wp/2017/05/08/impact-independence-scottish-agriculture/feed/0Poll: Most Bangladeshis See Country Pointed in Right Directionhttp://global-politics.co.uk/wp/2016/02/09/poll-most-bangladeshis-see-country-pointed-in-right-direction/
Tue, 09 Feb 2016 23:02:17 +0000http://global-politics.co.uk/wp/?p=2149Recent attacks by extremists have not dampened enthusiasm for future. By Mohammad Ziauddin, Ambassador of Bangladesh to the United States Bangladesh is headed in the right direction. That’s the conclusion of a new survey conducted by the respected International Republican Institute. IRI, an independent, non-partisan U.S. based organization that assists political parties to achieve good […]

Bangladesh is headed in the right direction. That’s the conclusion of a new survey conducted by the respected International Republican Institute. IRI, an independent, non-partisan U.S. based organization that assists political parties to achieve good governance and civil society development, reports that Bangladeshis are confident about the future of their country and their own well-being.

A key reason for the optimism is that the economy is growing smartly. The Bangladeshi economy grew over 6 percent annually over the past several years and is poised for even higher growth. In particular, Bangladesh’s important garment industry is booming and has shifted to producing high-end, higher-profit products. Working conditions are improving in garment factories as Bangladeshi women increasingly become breadwinners in their households.

All of these changes, and more, are reflected in the IRI poll. An overwhelming majority of those surveyed (79 percent) believe the country’s economic condition is good. 65 percent said their personal and/or family’s economic situation improved over the last year, and 72 percent said they believe it will continue to improve over the next year.

By a large margin, respondents showed faith in Prime Minister Sheikh Hasina’s government and her direction for her country. 72 percent of those polled approve of the job being done by the government, according to the IRI. The IRI has been actively engaged in improving democracy throughout Asia.

And despite recently reported attacks by extremists on Bangladeshis and foreign guests, 80 percent of the poll’s respondents said that Bangladesh’s security situation is either good or very good. One reason is surely that Bangladeshis have seen the swift, decisive action taken against the perpetrators of these attacks. In other words, the poll reveals a striking difference in the perception of safety and security in Bangladesh by those who live there as opposed to the views expressed in the Western media.

Bangladesh is investing heavily in its infrastructure to ensure that its growth is sustainable over the long term. One example of this investment is the four-mile-long, multipurpose Padma Bridge, which will link the southwestern part of the country to the capital Dhaka and the northern and eastern regions. This bridge will help improve and change the image of Bangladesh. It will connect vast areas of the country to Dhaka and transform the lives of many Bangladeshis living in the isolated southwestern region of the country. By reducing the distance between major urban centers, the Padma Bridge will help to increase regional trade, alleviate poverty and speed up the country’s growth and development.

The Padma Bridge will carry multiple modes of transportation. The connecting railway on both sides of the bridge has been constructed to hold higher loads than usual. This will provide the missing but essential rail infrastructure needed in the region and increase both imports and exports for the country. The bridge will facilitate inter-regional and cross-river transports to passengers and freight. It will also transport natural gas and help spur telecommunications and electricity transmission in a cost-effective way.

The construction of the bridge will be a huge job creator. It will drive tourism in southwest regions that have been difficult to reach. The bridge will also help rural farmers by providing easy forms of transportation to directly send perishables to Dhaka and other cities. In fact, it has been estimated that the Padma Bridge will increase Bangladesh’s Gross Domestic Product (GDP) by as much as 1.2 percent as soon as the bridge becomes operational in a few years.

With a growing workforce and developing infrastructure, the future for Bangladesh is bright. The IRI survey is the latest proof of that progress.

]]>Choosing Cohesion Over Conflicthttp://global-politics.co.uk/wp/2015/12/31/choosing-cohesion-over-conflict/
Thu, 31 Dec 2015 14:32:59 +0000http://global-politics.co.uk/wp/?p=2104By Mustapha El-Khalfi – Minister of Communications, Spokesman of the Government of Morocco With difficult global headwinds and regional instability, now is the time to embrace a new era of national unity Since 2004 $1 billion has been invested in the Moroccan Sahara, which is evident in the construction of more than 150 new local […]

By Mustapha El-Khalfi – Minister of Communications, Spokesman of the Government of Morocco

With difficult global headwinds and regional instability, now is the time to embrace a new era of national unity

Since 2004 $1 billion has been invested in the Moroccan Sahara, which is evident in the construction of more than 150 new local health centers, eight major hospitals and 500 schools. These investments – alongside billions invested in business-critical infrastructure – have transformed lives with greater access to services such as healthcare facilities and education. Engagement in the democratic process is also high in the Moroccan Sahara with a 79% participation rate in the September 2015 local and regional elections. Nationally 53.67% turned out to vote. This is a part of Morocco that is passionately engaged in the political process and that wants to be a part of the nation’s future.

So, what’s the problem?

The problem is one that many nations around the world have faced, and continue to face: small nationalistic movements that purport to represent the will of the majority but instead represent the narrow political will of a tiny minority who pose a threat to stability and prosperity. And stability is particularly important right now in a region that has undergone major political upheaval and conflict over recent years. Separatist movements often court popular opinion as the protagonist but in reality they only serve to offer an alternative of small, weakened statehood in an increasingly global and integrated economy.

We should be under no illusions: the politics and economics of this part of the world have been transformed. Within a decade our neighbours have moved from social and economic growth and stability towards military conflict, decimated infrastructure and societal collapse. Moroccans are proud to live in a country that is at peace with itself, which has a stable government and social cohesion. Last year Morocco’s economy grew by 2.6 per cent and is on target to expand by a further 5 per cent this year. Anybody walking through their local neighbourhood will see small traders doing well – we have seen our exports grow by 6.4 per cent over the past year. Our trade deficit in H1 of this year shrunk to $7.8 billion from a high of $10.2 billion in H1 2014. This represents greater demand for Moroccan goods and services, more money in the pockets of ordinary working people and greater tax receipts for the Treasury. This economic success means that we can continue to maintain the pace of investment that we have enjoyed over recent years.

Right across the Moroccan Sahara, billions of dollars have been invested in business-critical infrastructure. These investments give us a significant competitive edge and, I believe, strengthen our role as the true gateway between Europe and the African continent. Infrastructure in areas such as ports and road networks are essential because they provide world-class export logistics for our rapidly growing automotive sector, which surpassed phosphates for the first time in 2014. Companies choosing Morocco include Renault, Bombardier and Sumitomi Electric Wiring – major global manufacturing companies selecting Morocco as an African base. Last year the government launched a seven year Industrial Acceleration Plan, which aims to boost industrial output from 14 per cent to 23 per cent by 2020. And as manufacturing rises, so too do levels of employment.

The economic and political stability that we enjoy has been recognised not only by global companies but also by international bodies such as the IMF and the World Bank, which have both extended multi-billion Dollar credit facilities to the country – funds that are specifically earmarked for investment in national infrastructure, economic development and public services. These represent a nod of approval from the international community, allowing us to progress on our goal to becoming a regional industrial hub – but also a country that supports the vulnerable and provides opportunities for social mobility.

Issues such as poverty reduction and job creation are important national priorities. His Majesty the King, Mohammed VI has been a strong advocate of social and economic reforms that benefit all Moroccan people. During a speech in 2015 he commented on the importance of social inclusion, saying that, “Setting up institutions, no matter how important they may be, is not an end in itself. By the same token, economic growth can only be significant if it contributes to the improving people’s quality of life.” His Majesty’s strongly held belief in social mobility is borne out in practice. He created the Hassan II Fund for Economic and Social Development (FHII) which supports growing businesses in key growth sectors through direct grants that help companies expand; particularly in industrial sectors with high potential for job and export growth such as automotive and aviation.

It is now 40 years since the Moroccan Sahara was liberated from the restraints of colonialism. Since then it has flourished, mirroring the national picture. Morocco is North Africa’s most competitive economy – and the fourth most competitive in the entire region according to the World Economic Forum. The Moroccan Sahara is indelibly wound up in that success. We now have an opportunity to accelerate socio-economic growth for Morocco and all Moroccan citizens, from Tangiers to the Southern Provinces. Morocco has this year set out plans to double the Southern Sahara’s GDP over the next ten years through reform and investment, promising to create in the region of 120,000 new jobs. For Moroccans, the next chapter looks incredibly promising. It is a period that will see a surge in investment in social and economic projects, widening access to education and the creation of career and job opportunities in industries that have never been seen before in this part of our nation. This is a future that I hope all proud Moroccans will embrace.

]]>Poland: A Foreign Policy in Fluxhttp://global-politics.co.uk/wp/2015/09/07/poland-a-foreign-policy-in-flux/
Mon, 07 Sep 2015 21:07:55 +0000http://global-politics.co.uk/wp/?p=1869Just three weeks after entering office, Polish President Andrzej Duda’s first official visit to Berlin on August 28 allayed concerns in some quarters that his presidency would resurrect the combative foreign policy his right-wing party, Law and Justice, practiced the last time it was in power from 2005 to 2007. Back then, prickly ties with […]

Just three weeks after entering office, Polish President Andrzej Duda’s first official visit to Berlin on August 28 allayed concerns in some quarters that his presidency would resurrect the combative foreign policy his right-wing party, Law and Justice, practiced the last time it was in power from 2005 to 2007. Back then, prickly ties with Berlin, deep skepticism towards the European Union, and a clear preference for close security ties with the United States over engagement with the continent resulted in a common perception that Poland was an unreliable European partner.

Civic Platform leader Donald Tusk – now President of the European Commission – changed course after becoming prime minister in 2007 by revitalizing ties with Berlin and spearheading an era of constructive foreign policy that has raised Poland’s standing and influence in European affairs to unprecedented levels. Now that Law and Justice is projected to unseat the government in parliamentary elections scheduled for October 25th, many observers fear that Duda’s promise to recalibrate Polish foreign policy will include downgrading relations with Germany, a course that would be strategically catastrophic for Poland and paralyzing for the broader European community. If it returns to power this year, Law and Justice should unequivocally disown its failed foreign policy legacy and pledge to continue Poland’s unprecedentedly strong ties with its western neighbor.

Despite tough campaign rhetoric promising to stand up to Germany in defense of Polish interests, Duda’s visit to Berlin was generally well received, with one major German daily proclaiming him “a declared friend of Germany.” In meetings with officials, including his counterpart President Joachim Gauck and later Chancellor Angela Merkel, Duda praised Poland’s constructive ties with Germany and in particular Merkel’s leadership against Russian aggression in Ukraine. One of Duda’s aides remarked that visiting Germany early in his term was “an important signal that the president wants to continue the dynamism and intensity of Polish-German relations.” Indeed, Poland’s need for robust ties with Germany stems from the core of Polish security policy: fearful that Russia’s military gaze might extend to other eastern European states in the wake of its armed intervention in Ukraine, Duda’s top foreign policy priority in the short-term will be achieving what the current Polish government has thus far failed to, namely persuading Germany to consent to permanent NATO installations on Polish territory as a deterrent against Russian aggression. Germany and the United States have long rebuffed Poland’s request, fearing that such a radical change in NATO policy would needlessly provoke Russia. Despite differences on this and other issues, however, there were sighs of relief in both countries that Duda’s conciliatory remarks signaled, at least for now, the continuation of healthy bilateral ties.

The possibility that a future Law and Justice government will alter Polish foreign policy to the detriment of Polish-German ties nevertheless remains real. Before his visit to Berlin, Duda insisted that his party would merely “correct,” not “revolutionize” foreign policy, but many hardliners in the Law and Justice camp demand that the party, once in power, resurrect its skeptical stance towards Berlin. Duda’s friendly remarks in Berlin suggest that at least he understands Poland’s challenging security environment makes dysfunctional relations with its important western neighbor unworkable given the need to leverage a united European front, including strong German support, against Russian aggression in Ukraine. However, since the Polish presidency is largely ceremonial and there is no telling yet what role the party’s leader, former prime minister Jaroslaw Kaczynski, will have in domestic affairs after October, it is premature to declare that Polish-German relations will remain as strong as they are now in the coming years.

Given the complex situation NATO faces with Russia’s belligerent behavior and divergent views in Europe over the best approach to handling Moscow, the United States has a role to play in ensuring the continuation of friendly Warsaw-Berlin ties. The United States should make clear that it would oppose any attempt by Warsaw to create distance between itself, Berlin, and Brussels by stressing that Poland’s security, and by extension America’s regional interests, are best advanced by strengthening the continental ties Poland has impressively fostered since 2007. During the last decade when Law and Justice picked fights with Berlin and Brussels over issues ranging from energy policy to relations with Russia, Poland invested heavily in warm ties with the Bush administration, which enthusiastically courted “new Europe” as a source of international support for its foreign policy. This October, the United States should take the opportunity after congratulating the new Polish government to reaffirm their close relationship and Poland’s critical role at the heart of transatlantic relations, but also to stress that it would regard any new policy in Warsaw distinguishing Polish interests from constructive ties with Germany as contrary to the objective of achieving European security through unity and collaboration. This would dissuade policy makers in Warsaw from attempting to resurrect Law and Justice’s foreign policy playbook of the previous decade, when cooperation with European partners was downgraded in hopes that the United States would step in to bolster Poland’s security.

Polish-German reconciliation is one of the most significant stories of the postwar era. Hundreds of thousands of Poles still living today have personal memories of Nazi Germany’s brutal occupation, and despite the destruction wrought by that tragedy, the two neighbors have fostered economic, diplomatic, and security ties whose strength and comprehensiveness are a testament to the promise and potential of European integration. Presiding over a period of unprecedented economic growth and external engagement with the continent, Duda’s predecessor, Bronislaw Komorowski, as well as Donald Tusk and current Prime Minister Ewa Kopacz have recognized and capitalized on the economic and political opportunities of close Polish-German ties during the 8 remarkably fruitful years their party has been in power. If Poles choose to return Law and Justice to power this fall, the party should pledge to continue this vital prong of Civic Platform’s foreign policy, whose legacy has made Poland safer and more influential than at any other time in its recent history.

]]>Is Iran Headed For Another Recession?http://global-politics.co.uk/wp/2015/03/28/is-iran-headed-for-another-recession/
Sat, 28 Mar 2015 22:18:30 +0000http://global-politics.co.uk/wp/?p=1419Garnering over 50 percent of the vote, Hassan Rouhani assumed a decisive victory on June 2013 and became Iran’s new president after Mahmoud Ahmadinejad’s eight year long reign. Vowing to pull the country out of its sanction filled, depressed economy, he won the elections by a landslide. Less than three months ago, during a December […]

Garnering over 50 percent of the vote, Hassan Rouhani assumed a decisive victory on June 2013 and became Iran’s new president after Mahmoud Ahmadinejad’s eight year long reign. Vowing to pull the country out of its sanction filled, depressed economy, he won the elections by a landslide. Less than three months ago, during a December 24th speech, Rouhani proudly announced that, after a two year recession, he had made good on that promise. The economy had expanded four percent in the six months from the start of this Iranian year on March 21. Inflation, once around 40%, had more than halved, now at around 17%. But this recent victory may be short lived.

The plunge of international crude oil prices has many questioning Iran’s financial health. Numerous Iranian officials are convinced Saudi Arabia has refused to cut its oil production in an attempt to weaken Iran. With a budget based on sales at US$100 a barrel, Tehran has been forced to cut that projection to $72 this month. Rouhani’s successful revival of the economy is now in serious jeopardy and has him publicly recognizing the importance of non-oil exports.

Another pressing matter? Have all international sanctions against Iran lifted.

“The nation can’t achieve sustainable economic growth while living in isolation. Opening up doesn’t mean letting go of the nation’s ideals and principles,” he said, during a Jan. 4 speech. For years now, Iranian oil exports have suffered harsh Western sanctions as punishment for Tehran’s nuclear program, which Iran contends is peaceful and for power generation only. These sanctions have crippled Iran’s ability to export oil, bleeding it from precious revenue, which is down close to 50% since 2011. The EIA (US Energy Information Administration) estimates that Iran’s oil exports have fallen from 2.5 million barrels a day in 2011 to about one million barrels today as a result of sanctions.

Despite growing efforts to appease the West, Rouhani is facing strong opposition from hardliners back home, such as Supreme Leader Ali Khamenei, who insist the West cannot be trusted to lift sanctions and that Iran can weather the storm and even flourish under an autarchic “resistance economy.” Efforts to lock a deal with world powers over the Iran’s nuclear program have secured Iran some relief from economic sanctions, though negotiations are rumored to have been prolonged until July due to major differences. This potential deal has managed to somewhat halt the collapse of the TIPEX Index, a broad measure of Iran’s stock market.

Another hot topic? The case for foreign investment.

Its $1.2 trillion purchasing-power parity makes Iran the world’s 18th-largest economy. According to the U.S. Energy Information Administration, this country holds the world’s fourth-largest proven crude oil reserves and has the world’s second-largest natural gas reserves. While Rouhani is frantically calling for foreign investment to support the economy, conservative hardliners in Tehran are squirming at the idea of alien companies at home.

Moreover, there is the issue of transparency – or lack thereof. For 2014, Iran ranked 136 out of 175 by the Transparency International, a Berlin-based anti-corruption lobby. Iran’s military force, the Revolutionary Guard Corps, has long enjoyed an extensive commercial empire, controlling seaports and numerous land borders. The flight of foreign energy firms eventually resulted in the Guard’s engineering companies controlling Iran’s oil resources. An organization that once focused solely on defense is now deeply involved in Iran’s business affairs. Their sizable wealth can be largely attributed to their disregard of tax payments, something average business owners can simply not compete with. It is therefore implausible that the Revolutionary Guard Corps will welcome foreign firms that will inevitably disrupt their monopoly. While Ahmadinejad fostered the Revolutionary Guards’ power, Rouhani is now calling for transparency, something that is only intensifying the ongoing power struggle.

As one of the youngest societies in the world, over 60 percent of its nearly 80 million inhabitants are under the age of 30. It is estimated that the government creates only about 300,000 of the approximately 1 million jobs needed annually to absorb young people entering the labor market. With an abysmal 26% youth unemployment rate, the number of Iranians moving abroad continues to escalate as many are forced to leave home and gamble their luck in countries like Sweden, Germany, Canada, Australia and North America. According to the IMF, Iran has one of the highest rates of brain drain in the world. Iran’s government predicts that close to 150,000 highly talented people leave each year. According to the World Bank, this translates to an annual loss of $50 billion. Given that it is national governments that primarily fund Iran’s higher education system, this migration pattern is especially devastating: in financial terms, each skilled worker who leaves the country represents a hefty failed investment.

For many Iranians this is a poignant time, as they struggle to make ends meet. Bread has already gone up 30% since December. An increase in value added tax is on the cards, along with higher fuel and food prices. In the wake of this unfolding financial crisis, Iran must now forge a lifeline with the West or embrace isolation and hope for the best.

]]>Save TTIP or Risk the Alliancehttp://global-politics.co.uk/wp/2015/03/25/save-ttip-or-risk-the-alliance/
Wed, 25 Mar 2015 23:18:14 +0000http://global-politics.co.uk/wp/?p=1399The European Union (EU) and the United States (U.S.) have been negotiating the Transatlantic Trade and Investment Partnership (TTIP) since 2013. Intended to revive the transatlantic economies by eliminating tariffs and accepting various degrees of regulatory convergence or mutual recognition across a wide range of sectors, and solidify EU-U.S. relations, it now appears to be […]

The European Union (EU) and the United States (U.S.) have been negotiating the Transatlantic Trade and Investment Partnership (TTIP) since 2013. Intended to revive the transatlantic economies by eliminating tariffs and accepting various degrees of regulatory convergence or mutual recognition across a wide range of sectors, and solidify EU-U.S. relations, it now appears to be in trouble. There are numerous sectors and issues where, for political, cultural, and legal reasons, the EU and the U.S. look unlikely to recognize each others’ standards, potentially causing the agreement to collapse. This raises two critical concerns. First, since a deal will require legislative ratification on both sides of the Atlantic, public backing is essential. Growing public opposition, especially in Europe, is primarily focused on sectors where negotiations are stuck. Second, a failed TTIP will have far-reaching ramifications beyond trade and investments, affecting security developments in NATO, policies in East Asia, and efforts to counter Putin’s complete disregard for domestic and international law.

Unlike their previous, separate bilateral trade agreements with third countries, where the EU and the U.S. used their size and attractiveness to extract concessions and regulatory changes, negotiations between equals have proven immensely challenging. For example, the U.S. wants scientific findings to be the only basis for granting EU market access to American beef, poultry, and pork. The EU refuses. Europeans trust science to guide most policies, but food regulations are driven equally much by culture and perceptions. There is an expanded use of the precautionary principle, where products are not approved if there are any doubts of their effects and consequences. Add in that many Europeans, led by Germany, perceive the U.S. as having lower safety standards, and the result is that even though most processes used by the U.S. to ensure safe food production have likewise been deemed safe by the European Food Safety Agency, political approval has remained elusive. Interestingly, Americans also doubt German standards. My own discussions with U.S. officials indicate that Congressional support for TTIP is contingent on expanded access for American poultry. Other areas of contention include investments, financial regulations, public procurement, and public services.

Polls show continuously declining support for TTIP, especially in Europe. Support for TTIP now stands at 39% in Germany and Austria, whereas a majority of Brits, primarily concerned with privatization of public health services, doubt TTIP will serve them well. European and American public interest groups have skillfully combined traditional tactics (protests, lobbying) with savvy use of all kinds of social media and other online tools to present “regulatory convergence” as meaning bans on improvements to public safety by cementing current standards, while “regulatory compatibility” and “common standards” are interpreted as euphemisms for lowering labor, environmental, and consumer standards. The controversial Investor-to-State-Dispute Settlement system (ISDS), a mechanism to ensure that foreign investors have access to non-legislative, de-politicized, non-domestic, legal redress for compensation when a host country’s government violates the terms of the treaty (for example through an illegal expropriation), is slated for inclusion. Both parties agree on revisions to ensure transparency and limit national liabilities. Yet interest groups are opposed, presenting ISDS as “corporate favoritism.” While language manipulation and creative associations may be little better than public officials citing frequently criticized economic models in order to create overly optimistic expectations of jobs and economic growth stemming from TTIP, there is one big difference: the public believes civil society groups.

Both allies have significant geopolitical interests in Asia, but a failed TTIP will compound existing disagreements over how to approach the challenge of a globally active China. The size and importance of the transatlantic market place to the rest of the world’s producers and service providers means that common transatlantic standards would, as has been repeatedly stated by President Obama and other officials on both sides of the Atlantic, in effect set global standards before others (read China) can write the rules of the game. Samsung for instance, is reported to be undecided on whether to use American or European specifications for its next generation electronics, and if the Atlantic partners fail to agree, it may go with Chinese standards. A failure to include investor protection in TTIP will also significantly weaken prospects for its inclusion in bilateral investment treaties with China, which both the EU and U.S. are currently negotiating. Even citizen groups I have spoken with are under no illusion that the state-run Chinese judicial system will award foreign investors fair and equitable treatment. Adding to transatlantic differences over China’s currency manipulation (a huge concern in the U.S.), and Europe’s more welcoming approach to Chinese investments, was the March 2015 decision of the four largest European states to join the China-led Asian International Infrastructure Bank, much to the chagrin of the U.S. The latter is also increasingly upset that leading European countries are backtracking on commitments to increase defense spending to the commonly agreed NATO target of 2% of GDP. A further test to transatlantic cohesion arose when a number of EU states explicitly questioned the wisdom of continued sanctions against Russia, even if they eventually agreed to keep sanctions in place until December 2015. If TTIP collapses America may well lose patience with what appears to be a wavering European partner.

A strong and unified transatlantic message about not only the economic benefits of TTIP, but which also makes clear that TTIP cannot change either side’s regulatory system (a trade agreement cannot alter domestic legal processes, only domestic legal processes can do that), is essential if negotiations are to succeed. So too is an emphasis on maintaining a liberal, rules- based international order. This can only be achieved through a concerted and holistic approach that is proactive. It must unite media relations, and use all channels of communication, including online and social media, where many voters get their information. The fallout from a failed TTIP is something either partner can ill afford.

]]>Khat Chewing – Benign Practice or Social Peril?http://global-politics.co.uk/wp/2015/02/22/khat-chewing-benign-practice-or-social-peril/
Sun, 22 Feb 2015 13:13:00 +0000http://global-politics.co.uk/wp/?p=1191A stimulant native to the Horn of Africa and the Arabian Peninsula, Khat is a narcotic leaf that induces mild euphoria upon chewing – an extremely popular custom in Somalia, Yemen, Kenya, Djibouti and Ethiopia. Lucrative business More than 25,000kg of khat is sold each day in Ethiopia’s Adaway Market and is a vital source of […]

A stimulant native to the Horn of Africa and the Arabian Peninsula, Khat is a narcotic leaf that induces mild euphoria upon chewing – an extremely popular custom in Somalia, Yemen, Kenya, Djibouti and Ethiopia.

Lucrative business

More than 25,000kg of khat is sold each day in Ethiopia’s Adaway Market and is a vital source of revenue for the nation. It was Ethiopia’s fourth largest export in 2013, bringing in over £160m that year alone. In Somalia, the 571 franchise based in Hergeisa is the region’s largest supplier, selling roughly 80 tonnes of khat every single day. The UN’s Office on Drugs and Crime estimates that Djibouti spends $170 million on khat annually, or approximately 30 percent of household income. An export worth well over $100m a year, Kenya also relies heavily on khat. Here, thousands of farmers depend on the trade of this leaf and is usually referred to as “miraa”, originating from the Meru region of Kenya. This profitable business shows no signs of slowing down: with an estimated 500,000 farmers across the Horn of Africa and Arabian Peninsula, this number continues to grow each year. Since World War II, and especially over the past 20 years, the prevalence of this practice has skyrocketed, with no social group excluded.

Dangerous Side Effects

The World Health Organization (WHO) lists khat as a drug that creates “dependence” in people, meaning it produces a continuing desire to keep using it. While chewing this leaf causes users to feel more alert and chatty, substantial use often leads to insomnia, high blood pressure, heart problems, chronic constipations and impotence. And that’s best case scenario. Long-term risks include the development of mouth cancer, stomach ulcers and paranoia. It can create feelings of anxiety and aggression and aggravate pre-existing mental health problems. Many believe that this leaf has similar, but less intense effects, to those of cocaine. Upon chewing, users experience an unusual feeling of excitement and awareness, often causing them to lose concentration when carrying out the simplest of tasks. Because khat chewing successfully suppresses appetite, chronic users often suffer from severe malnutrition.

UK Ban

As immigrants from East Africa and the Middle East have settled in communities throughout Europe and North America, they have brought their khat chewing tradition with them, triggering some friction between khat users and law enforcement officials.

In 2013, the UK government classified khat as a class C drug, in part to prevent the country from becoming a center for smuggling khat to other countries within Europe and America, where the drug has long been illegal. The United Kingdom’s ban on possession, sale and importing of khat took effect at the end of June 2013. Prior to the ban, over a thousand tons were flown in annually from East Africa and distributed from warehouses near Heathrow airport. In 2013, close to £15 million worth of khat was imported from Kenya. It is believed that an estimated 90,000 people in the UK, mainly Somalis, chew khat on a regular basis. Detractors argue the ban will further criminalize African and Arab immigrant communities in Britain, who habitually chew the leaf.

Practice or Peril?

Khat chewing is a practice that dates back thousands of years. For its many aficionados, this ritual is analogous to the drinking of coffee or alcohol in the West. Contrary to alcohol, chewing khat is not forbidden in Islam and serves as an excuse to get together and socialize. In Yemen, for example, it is estimated that roughly 90% of adult males chew khat three to four hours a day. However, critics insist the leaf is destroying Yemen. Proving a more fruitful source of income than growing vegetables, many are eagerly joining the khat frenzy, leading to a huge increase in the proportion of Yemen’s arable land devoted to khat farming. Khat requires a lot of water, a scarce and precious resource in Yemen. While khat fields are usually flooded only twice a month, they deplete a whopping 30% of the country’s water — most of which is pumped from underground aquifers filled thousands of years ago and refilled very slowly by rainfall’s rare appearances. Yemen is in serious danger of becoming the world’s first country to run out of water in less than five years and this practice is only exacerbating that risk.

With a regular user consuming about a bag a day, this is an expensive habit in Yemen, where about 45% of the population lives below the poverty line. Government figures indicate that the majority of Yemenite families spend more money on khat than on food. In a country where 43% of the population lives below the poverty line, it is a similar story in Somalia, where approximately 75% of males are avid chewers.

Furthermore, the consumption of khat seems to encourage corruption and other criminal activities due to the costly nature of the habit (when considering the per capita income), often compelling the consumer to earn more money so as to placate his vice. Moreover, there is growing consensus that khat is linked to violence in Somalia. A 2007 study from PLOS Medicine found that close to 40 percent of Somali combatants had used khat during the prior week.

Advocates of khat production insist it brings precious revenue to the countries that export it, but in nations plagued with rampant unemployment and economic grievances, it is incongruous to argue that khat production generates meaningful income.

While the effects of this leaf are by no means trivial, in countries where unemployment and hunger prevail, it is no surprise that khat’s energy-boosting and hunger-numbing properties make it so appealing. Students are able to focus on their homework rather than their familiar hunger pains. Underpaid laborers can work for hours without meals. In a sense, it can be argued that endemic economic woes in all of these beleaguered countries reinforce the use of khat as an escape from reality.

]]>Mediterranean Migration Reveals Flaws in Dublin Conventionhttp://global-politics.co.uk/wp/2015/02/21/mediterranean-migration-needs-collective-european-action-down-with-the-dublin-regulation/
Sat, 21 Feb 2015 15:56:43 +0000http://global-politics.co.uk/wp/?p=1126John Donne famously reminded us that ‘no man is an island’. Likewise in today’s polycentric, ever-globalized, and interconnected world, no state can remain untouched by social, economic, or political influences from neighbouring states. As terrible as Islamic State has been for people living in Syria, Iraq and Libya, its effects on Europe are also increasingly being felt. […]

John Donne famously reminded us that ‘no man is an island’. Likewise in today’s polycentric, ever-globalized, and interconnected world, no state can remain untouched by social, economic, or political influences from neighbouring states. As terrible as Islamic State has been for people living in Syria, Iraq and Libya, its effects on Europe are also increasingly being felt.

The rise of migration from North Africa and the Middle East to Southern Europe has resulted in a tragic increase in human suffering. The great exodus began last June as ISIS moved through Iraq, expelling Christians and other religious groups from cities such as Mosul. The United Nations Refugee Agency reported that in 2014 Europe saw a 25% increase of asylum applications, with urgent European action required to stop rising refugee and migrant deaths at sea. Furthermore, mounting pressure has fallen on neighbouring nations, as the UNHCR attempts to cooperate and interact with volatile governments in Syria, Sudan, Iran, Pakistan and Egypt in hopes of dealing with the ever-growing numbers of refugees.

Unsurprisingly, there has been increasing demand for the services provided by illegal transport cartels offering to take refugees from North Africa to Europe (namely Spain, Malta, Greece and Italy). These modes of travel are highly dangerous, as highlighted recently when over 300 migrants drowned after attempting to cross the Mediterranean Sea from Tripoli in rough seas.

Desperate refugees are herded like cattle into overcrowded fishing boats and inflatable rafts, which are turned onto ‘auto pilot mode’ (as the well-paid smuggler jumps off), leaving the illegal immigrants to face their fate at the mercy of the elements. The BBC reported that the average value of a boat of migrants to traffickers can be more than $1m, which these human trafficking “businesses” receive, regardless of whether their human cargo survive the journey.

Under the current legislation of the 2003 Dublin Regulation, if the boat is picked up by a European naval or coast guard service, or is fortunate enough to dock on dry land, the first European country to offer assistance is responsible for the adequate protection and provision of the illegals. The purpose of this convention is firstly, to allocate the responsibility for asylum applications to one member state to prevent situations where an asylum seeker is passed from one country to another without anyone prepared to examine the merits of the claim, and secondly, to deal with ‘asylum-shopping'[ref]Sandgren, P.(2001). The Dublin Convention, The University of Lund p.1[/ref], when an asylum seeker lodges applications in several different countries at the same time.

Article 8 of the Dublin Convention establishes that if the asylum seeker has never been in contact with any state within the EU, the asylum seeker is not allowed to freely choose in which state he or she wishes to lodge an application; instead, the state whose territory he or she enters is responsible[ref]Sandgren, P.(2001). The Dublin Convention, The University of Lund, p.18[/ref].

Unfortunately, the instrument has not functioned as intended, partly due to subjective determinations of whether a country is ‘safe’. For example, a refugee from Iraq who traveled through Egypt to get to Italy may have their asylum claim refused if the authorities deem Egypt to be the first safe state traveled through.

Europe’s Schengen Acquis adds further strain to these major immigrant receiving countries. Both the Dublin Convention and the Schengen Agreement deal with the allocation of responsibility for processing asylum claims. The existence of borderless travel among European States can result in further complications, such as an asylum seeker refused refuge in France being deported back to the original state he or she initially came through.

Even those who make it across the Mediterranean to the continent are not guaranteed safety or comfort. The UNHCR highlighted that some governments are more concerned about keeping people out than treating them as individuals who may be fleeing war or persecution. U.N. High Commissioner for Refugees, Antonio Guterres, noted that “Security and immigration management are concerns for any country, but policies must be designed in a way that human lives do not end up becoming collateral damage,”.

The strain is also greatly felt by the Greek and Italian economies. The Economist estimates that these naval and humanitarian operations cost Italy €9.5 million a month. Neither Greece nor Italy is in a position to begin to look after up to 5000 immigrants per weekend. Angelino Alfano – Italy’s Interior Minister, has repeatedly insisted the European Union must relieve the pressure on Italy’s services. Instead, the UN has had to step in and provide assistance for the 350,000 people stranded on Europe’s shores. These figures are three times higher than in the immediate aftermath of the 2011 Arab Spring revolts in Libya, which saw a previous annual high of 70,000 people.

Frontex, the EU agency that manages the cooperation between national border controls, and help prevent illegal immigration, human trafficking and terrorist infiltration, has a budget of €89.1 million. Frontex is able to coordinate border surveillance operations, but its role is not to replace border control of national authorities, but rather to provide ‘those EU countries that face an increased migratory pressure’ with additional assistance. This assistance and extra funding has not been enough, though, to cope with the demand for search and rescue operations, as illustrated by the thousands of deaths that have occurred in the past year alone.

The EU currently runs a border control operation called Triton to help these vulnerable European states. However, it cannot pre-empt problems occurring in international waters and is limited in remit and legal capacity, as it can only act when lives are immediately at risk. Deborah Haynes of The Times notes that with the recruitment of 6,000 extremists to ISIS since October, this North African and Middle Eastern migration is set to grow. For a number of geographically “peripheral” and often vulnerable states, the Dublin Convention is unsustainable. Its enactment preserves landlocked countries such as Austria and Hungary, along with more remote countries like the UK and Ireland from the brunt of this humanitarian crisis, while Italy’s exposed peninsula must deal with almost everything that fate and circumstance throws at it.

With IS having recently incited Egypt, Jordan, Japan, and Australia through provocative terror and publicity videos, the consequences of the fear spreading from the Middle East has already resulted in increased military action, which will continue to play a pivotal role in shaping events for the foreseeable future. With President Obama having just asked Congress to formally authorize military force against the Islamic State group, there seems little sign of stability just yet.

No man is an island, but neither is any nation. For now, the International community must view the IS threat and Libyan migration within the context of International Security. Frontex, the EU’s border control agency, is doing admirable work but other European States also need to take responsibility and send aid. In 2012, Germany was the third highest recipient and host of refugees in the world, supporting 589,700 refugees. However, there is great disparity across Europe, with the UK hosting just shy of 150,000 individuals and Ireland accepting an embarrassing total of just 6000.

There has to be a full-scale and collective effort to deal with the thousands of people who are drowning in the Mediterranean, especially in the coming months when the seas become calmer and the migration season begins again.

]]>China’s Expanding African Military Footprinthttp://global-politics.co.uk/wp/2015/02/17/chinas-expanding-african-military-footprint/
Tue, 17 Feb 2015 22:48:32 +0000http://global-politics.co.uk/wp/?p=1077Sun Tzu, in his seminal book The Art of War, argued that all warfare is fundamentally based on deception. “When able to attack, we must seem unable; When using our forces, we must seem inactive; When we are near, we must make the enemy believe we are far away; When far away, we must make […]

Sun Tzu, in his seminal book The Art of War, argued that all warfare is fundamentally based on deception.

“When able to attack, we must seem unable; When using our forces, we must seem inactive; When we are near, we must make the enemy believe we are far away; When far away, we must make him believe we are near.”

Throughout China’s history, this mantra has been at the core of its foreign policy, with Mao even instructing his generals not to miss any opportunity for deceit.

Closer to the present day, as the Middle Kingdom became more assertive on the world stage, its smoke and mirrors tactic took on new forms. Despite several public relations stunts – such as the country’s unbashful display of its first aircraft carrier – the major shift in China’s military strategy has so far escaped major public scrutiny. Africa’s exceedingly complex political and economic situation can be held up as a potent bellwether of Beijing’s military designs.

The African continent shares a long history with China and the Gulf of Aden is now being used by the country’s navy as part of its Silk Road commercial route. In recent decades economic links took off spectacularly. Bilateral trade went from $1 billion in 1980 to $166 billion in 2011, with Beijing displacing both the U.S. and former European colonial powers as the continent’s main trading partner.

This growth was facilitated less by the terms and finer details of the trade deals and rather more by what they didn’t stipulate: demands for internal political reform. China has long maintained a strong stance of non-interference in the domestic politics of African countries such as Zimbabwe, the Democratic Republic of Congo or Sudan. While some might welcome this policy, unrestricted weapons exports from Beijing have either worsened existing humanitarian crises in places such as Darfur, or have strengthened the rule of despots like Zimbabwe’s Robert Mugabe.

What began as a purely mercantile relationship sweetened by loans, foreign direct investments, and below-market prices for exports, is now discreetly evolving into a deeper and far-reaching partnership that could unsettle the balance of power on the continent. Indeed, evidence is already pointing to a strong bilateral convergence of interests. A 2013 study found that China has actually managed to transform its trade relationship with African countries into active foreign policy support inside the UN and other international bodies. Among those African dictators who depend on Beijing’s largesse to cling to power, China’s voice now carries far more weight than outdated links with former colonial powers.

China’s string of pearls strategy

A leaked document from late 2014 showed that the Chinese People’s Liberation Army Navy (PLAN) has planned the establishment of 18 “Overseas Strategic Support Bases” in the Indian and Atlantic oceans, seven of which will be built in Africa in Namibia, Djibouti, Kenya, Tanzania, Mozambique, Seychelles and Madagascar. Under the cover of protecting its commercial interests in Africa, these bases are supposed to follow three strategic military objectives: fueling and material supply bases for peacetime use, supply bases for warships and fully functional navy bases for replenishment and maintenance of large warships.

Much has been said about China’s maritime strategy, dubbed the “String of Pearls” model, which seeks to disguise multiple military bases behind deep-water ports, stretching from the South China Sea to the Indian Ocean and Africa, which would give Beijing the capacity to project power on most of the southern hemisphere. But so far, China’s cautious approach has deceived many as to its true intentions.

A recent incident in the Indian Ocean provides the blueprint for China’s vaunted dominance of Africa. A PLAN nuclear submarine surfaced in the waters of Sri Lanka and strangely enough docked at the country’s Chinese-owned commercial port, the Colombo South Container Terminal, instead of berthing at the neighboring military port. The explanation is that Colombo handed over total control of the port to Beijing, in exchange for relaxing loan conditions. In the Maldives, a similar maritime project was ceded to Beijing after the project’s Chinese-issued loan carried an unsustainable interest rate.

Since Africa does not exist in a security vacuum, but instead plays host to an interwoven web of military alliances and defense agreements struck with either the U.S. or other Western nations, the presence of China’s navy risks creating deep fault lines. Djibouti is by far the best example of a country walking a fine line between its Western commitments and the allure of China’s deep pockets, set against the backdrop of the dictatorial rule of its President Ismail Omar Guelleh.

The former French colony is one of Africa’s most important strategic hubs, hosting a string of vital military bases from the U.S., Japan, France, Germany and the headquarters of the EU’s anti-piracy operation Atalanta. Nevertheless, Guelleh has extended a hand to China and has embarked on 14 Chinese-funded megaprojects, including airports and a port, with a total price tag of $9.8 billion, or six times more than its GDP.

What’s more, the government rescinded an agreement with a Dubai-based port operator for its main deep-water port (Doraleh) and sold it to the Chinese. Echoing Beijing’s inroads in Zimbabwe, bilateral ties were deepened after the signing of a strategic defense agreement, which sparked the ire of U.S. National Security Advisor Susan Rice. In addition, with Chinese money flowing in, Guelleh chased off several Western multinationals, such as Mobil, Shell and Total, on trumped up charges.

Djibouti’s deteriorating business environment, along with the country’s shift away from Western powers are strong indications of China’s growing leverage with the government of Djibouti. Under the cover of commercial deals, the Chinese tiger is achieving a two-fold purpose: discreetly expanding the global reach of its military, while maintaining the impression that its interests are purely commercial. Which was precisely the lesson Sun Tzu taught his followers in the 5th century BC.